Correlation Between Reckitt Benckiser and Canadian General
Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser and Canadian General at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Reckitt Benckiser and Canadian General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reckitt Benckiser Group and Canadian General Investments, you can compare the effects of market volatilities on Reckitt Benckiser and Canadian General and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Reckitt Benckiser with a short position of Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and Canadian General.
Diversification Opportunities for Reckitt Benckiser and Canadian General
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Reckitt and Canadian is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv and Reckitt Benckiser is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Reckitt Benckiser Group are associated (or correlated) with Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Reckitt Benckiser i.e., Reckitt Benckiser and Canadian General go up and down completely randomly.
Pair Corralation between Reckitt Benckiser and Canadian General
Assuming the 90 days trading horizon Reckitt Benckiser Group is expected to generate 0.45 times more return on investment than Canadian General. However, Reckitt Benckiser Group is 2.22 times less risky than Canadian General. It trades about 0.43 of its potential returns per unit of risk. Canadian General Investments is currently generating about 0.08 per unit of risk. If you would invest 486,900 in Reckitt Benckiser Group on November 4, 2024 and sell it today you would earn a total of 46,100 from holding Reckitt Benckiser Group or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Reckitt Benckiser Group vs. Canadian General Investments
Performance |
| Timeline |
| Reckitt Benckiser |
| Canadian General Inv |
Reckitt Benckiser and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reckitt Benckiser and Canadian General
The main advantage of trading using opposite Reckitt Benckiser and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser position performs unexpectedly, Canadian General can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Canadian General will offset losses from the drop in Canadian General's long position.| Reckitt Benckiser vs. Roadside Real Estate | Reckitt Benckiser vs. United States Steel | Reckitt Benckiser vs. Impax Environmental Markets | Reckitt Benckiser vs. Tata Steel Limited |
| Canadian General vs. Cognizant Technology Solutions | Canadian General vs. Dalata Hotel Group | Canadian General vs. Axway Software SA | Canadian General vs. Gruppo MutuiOnline SpA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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